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Goldman's Derivative Growth Made It More Systemically Important

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Tuesday, 08 Aug 2017 06:25 AM

Goldman Sachs Group Inc. has less than six months to slim down.

That’s one conclusion to draw from the company’s quarterly securities filing Friday. Like other global systemically important banks, it has to maintain a capital cushion that’s set by the firm’s size and complexity. That measure likely climbed to 3 percent at the end of June, the bank estimated.

As Credit Suisse Group AG’s Susan Roth Katzke noted in an Aug. 6 report, the bank said the biggest driver of the increase is growth in the “notional amount of short-term derivative contracts.” That pushed the requirement above the 2.5 percent of risk-weighted assets it’s currently assigned by regulators.

JPMorgan Chase & Co. shed more than $220 billion of assets in 2015 to try to reduce its required cushion based on systemic importance. Goldman Sachs has until the end of the year -- when regulators decide what capital ratios to use in setting January 2019 requirements -- to decide whether to adjust or accept the higher bar.

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Goldman Sachs Group Inc. has less than six months to slim down.That's one conclusion to draw from the company's quarterly securities filing Friday. Like other global systemically important banks, it has to maintain a capital cushion that's set by the firm's size and...
goldman, derivative, growth, important
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2017-25-08
Tuesday, 08 Aug 2017 06:25 AM
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